Last month in response to my column, which looked at salespeoples’ obsession with pain, a reader made the following comment: “please stop talking to salespeople and start addressing the targets, sales managers, VPs, presidents and the system that is assigning quota.”
Around the same time I read the comment, I had a meeting with an owner of a company and I mentioned benchmarkingand its role in driving adoption and sustainable change. He asked how benchmarking fits in, and as a result of these two events, I am focusing on the topic of benchmarking, metrics and their role in attaining quota.
While I do not profess to be an expert on the science of benchmarking, I do know that sales is a process, and quotas are a measure how well that process is working. From experience, I know that for salespeople to make or exceed quotas, they can will need to leverage metrics and benchmarking.
Benchmarking is the practice of comparing against a standard or external criteria, usually in one of two ways: The first is to measure a quantifiable element in advance of the training, then comparing it to the results following the training. Commonly this can be the number of appointments set by an individual or team before and after the program is completed. Pipeline values, number of proposals required to close one deal, average deal size, length of cycle or others are also measurable. Obviously the goal is to maintain and/or improve that number over time.
The other kind of benchmarking is to compare one internal sales team against another or your own sales organization against another. This may be difficult given competitive nature of sales organizations and their willingness to share data, but there are companies that specialize in benchmarking sales organization in a number of different areas.
With benchmarking you can identify gaps, prioritize development initiatives, and take steps to address and close the gaps, in the process improve sales. Specific to assigning quota, benchmarking can help determine territory size, mix and other factors that need to go into creating a realistic quota.
While it may be easy to blame the rep for missing his or her quota, sometimes the problem is the quota itself. Traditional top-down targets – not tied to any data or measures, distributed in some random way to reps, or in equal proportion without the benefit of data or benchmarking – can be just as much the cause for missed quotas. Benchmarking can be a great resource in establishing realistic and attainable quotas, while still delivering the numbers the company demands.
A metric is a quantitative indicator used to measure activity or other indicators of performance that help drive improvement in areas being benchmarked. While I don’t claim to be an expert, we use metrics in key activities that impact and contribute to the desired change.
For example, if we were measuring appointments, one of the metrics we would look at is the number of direct conversations a rep needs to secure one appointment. Say it takes eight conversations to secure one appointment, the ratio is 8:1. By focusing on the quality of the conversation and the rep’s ability to manage and overcome objections, we can improve that metric to 6:1. This would lead to either more appointments in the same timeframe and effort, or less time required to book appointments, allowing them to redeploy their time to other sales activities. The resulting gain would have a positive impact and improve the element being benchmarked.
The most important thing you can do is to make measuring and leveraging data a regular habit at your organization. I’m still surprised how few sales people or their managers know some of their crucial metrics. They will often know the stats of their favourite hockey player and the trend of that number, but will have no idea when it comes to an equivalent metric vital to their success. But again, it’s not just the reps who don’t know, often the “sales managers, VPs, presidents and the system that is assigning quota” are just as much in the dark.